Prelios Group: The Italy of the UTPs and NPLs, the new GACS, and the completely new BlinkS platform

20 March 2019, Claudia Cervini conducts an in-depth interview of Prelios Group CEO Riccardo Serrini for MF Dow Jones.
The occasion is the 8th edition of the European Debt Investing & Management Summit, held in Stockholm by the DDC Financial Group.
The topics discussed include the Italy of the UTPs and NPLs, interest on the part of foreign investors, renewal of GACS under the new regulations, Prelios’s breakthrough with proptech and fintech and the all-new BlinkS online credit trading platform.

THE INTERVIEW: Serrini (Prelios), foreign investors interested in NPLs and UTPs

MILAN (MF-DJ)--Foreign investors are demonstrating new interest in Italy’s distressed credit market; attractive opportunities to be taken advantage of right away in the world of cooperative credit and Italy’s small to mid-sized banks, with a "window" still open for the state guarantee on securitization of non-performing loans (GACS) in the senior securitization segment: "A bit more expensive than before, but still the most economical tool".
These are some of the considerations that emerged in MF-Dowjones’ telephone interview with Riccardo Serrini, CEO of the Prelios Group, chaired by Fabrizio Palenzona.

D. What is the atmosphere like at the eighth European Debt Investing & Management Summit underway today and tomorrow in Stockholm? How do investors feel about the Italian market?

R. There are investors and operators from more than 30 countries here at the summit. Italy’s distressed credit market is the biggest in terms of volumes, representing about 20% of the European market. And it’s also the market considered most interesting, because it’s at a less mature stage than Spain, which started a major clean-up of its finances a couple of years before Italy. And then there are investors who are currently leaving Spain and will be repositioning themselves on other markets, including Italy. The Italian market is seen as attractive, but also more complicated in legal terms, because it’s less standardized.

D. On the topic of legislation, what about the new rules for NPLs (and the ECB provisioning calendar) approved by the EU Parliament last week?

R. From the banks’ point of view, the rules have been improved somewhat over the original version, in the sense that they are slightly more lenient. I believe there has been some forcing of coverage of corporate unsecured credits. But having said this, these rules are necessary, because they contribute to the financial clean-up that had to be completed.

D. The renewal of the state GACS guarantee for senior securitizations has, according to many operators, turned out to be good news, though many complain of the higher cost and the introduction of a number of rules they consider severe. What are the consequences for banks and servicers?

R. The decree that was presented reveals that the tool has become a bit more expensive and has a slightly lessened lever effect. But in mathematical terms, it is still the most advantageous tool. It’s the best in terms of average weighted cost of capital.

D. At the end of 2018 Prelios was managing 24.7 billion as an NPL servicer. How much do you have today, and what are the prospects for 2019?

R. 25 billion. The major NPL operations are over, the big transfers have been made, and the time is coming for transfers of more limited size, which I expect to see in large numbers; we’re ready for this.

D. The new development for Prelios in proptech and fintech is called BlinkS, the first online trading platform for non-performing loans. How is it faring?

R. We’re collecting portfolios and will go live at the end of April.

D. What about probable defaulting: what is Prelios’ strategy? You announced the arrival of Tiziano Piemontesi as an important senior advisor yesterday.

R. To take advantage of the opportunities offered by the UTP market you need an integrated platform such as ours, and it’s an intense form of consulting. Piemontesi completes our team. He’s a senior figure with a lot of experience with UTPs and NPLs and in banking.

D. What are you aiming to do in this area?

R. We are constantly in contact with the banks, and we’re assessing a number of opportunities on the market.

D. Will you also be targeting the cooperative banks and credit unions in the country?

R. Cooperative banks represent an interesting opportunity. As do all those smaller banks that have no access to the capital market and speak a different language from investors. We offer our services as a bridge between these two worlds.